European Businesses Mounting Defense Against Threatened Sustainability Regulations
The European Union's Omnibus proposal, which aims to revise national climate commitments and strengthen corporate sustainability reporting, has sparked concerns among leading European businesses. The key concerns revolve around potential simplifications and rollbacks in scope and compliance requirements, which could hinder the EU's sustainability goals.
The proposed changes, such as raising the employee threshold for mandatory reporting, aim to reduce costs and administrative burdens. However, businesses fear that this could lead to fragmentation of sustainability reporting and due diligence frameworks, as companies may be required to create parallel, overlapping systems to meet different and inconsistent requirements across EU legislation.
Another major concern is the softening of due diligence obligations and the elimination of requirements such as climate transition plans. These reductions, reflecting industry concerns about over-regulation, are seen as critical for meaningful sustainability progress.
Moreover, the cap on value chain reporting could blind the system to material upstream risks and limit engagement with suppliers. This could deprive investors and customers of vital information on risks, dependencies, and opportunities across the economy.
Financial institutions like Allianz SE and Nordea use transition plans to steer financing towards climate goals. Excluding thousands of companies from sustainability reporting and due diligence obligations would remove them entirely from the transition conversation.
Many European businesses are already moving towards sustainability. Companies like Signify, the world leader in lighting, use EU-aligned reporting to demonstrate progress on circularity, emissions, and responsible sourcing. Ingka Group (IKEA) leverages sustainability reporting to engage their suppliers to achieve climate neutrality across their value chains.
The key message is that while there is a need for simplification, these rules should be ambitious, usable, and consistent across the EU. Leading companies and investors have launched a joint call for ambitious sustainability reporting rules under the Omnibus package. Europe must safeguard the integrity of its sustainable finance framework, as weakening the rules under external pressure would signal that Europe can be lobbied into abandoning its long-term interest.
In summary, while the Omnibus proposal aims to reduce compliance burdens and improve competitiveness, it may instead cause fragmentation, reduce the effectiveness of risk-based approaches, weaken due diligence standards, and ultimately hinder the EU's sustainability goals. The statement affirms the need to retain robust, mandatory transition planning under the Omnibus proposal, grounded in transparency, accountability, and long-term value creation.
- The proposed changes in the EU's Omnibus proposal, such as the cap on value chain reporting, could undermine the transparency required for investors and customers to assess risks, dependencies, and opportunities associated with climate-change, a key concern in environmental-science.
- Financial institutions like Allianz SE and Nordea use sustainable finance, particularly transition plans, to direct financing towards corporate sustainability goals. Removing thousands of companies from sustainability reporting and due diligence obligations could exclude them from climate-change discussions and the transition to a sustainable economy.
- Companies like Signify and Ingka Group (IKEA) have already embraced corporate sustainability, using EU-aligned reporting to showcase progress on circularity, emissions, and responsible sourcing, as well as engage suppliers to achieve climate neutrality across their value chains. A weakening of sustainability reporting rules, under the Omnibus proposal, could potentially hinder the EU's efforts to achieve its long-term sustainability goals.
